An Prediction Market User Made $436,000 on Wagers on Venezuela's Political Shift.
A trader profited close to $500,000 on the ouster of Venezuela's president just before it was officially announced, raising questions about potential gains made from confidential information of American actions.
Changing Odds in Wagers
Bets placed on the crypto-platform, a blockchain-based service, that NicolƔs Maduro would be no longer in control by the month's conclusion rose in the hours before former President Trump declared on January 3rd that the president had been seized.
A single trader, which joined the platform last month and took four positions, all on political events in Venezuela, earned over $436,000 from a starting bet of $32,537.
It remains unclear. The user had only a string of letters and numbers for identification.
Probability Spikes Before News Break
Platform data shows that traders estimated the likelihood of a political change at just 6.5% in the late afternoon of the prior Friday.
However the odds had increased to 11% by shortly before midnight and skyrocketed in the morning of Saturday, pointing to a rapid movement in market sentiment just before the official statement was made.
"This specific wager has all the characteristics of a transaction based on inside information," said a financial reform advocate.
A handful of other individuals also earned significant sums from predicting the capture.
Legal Questions Intensifies
Some lawmakers are beginning to pay attention.
A bill put forward on the start of the week would prevent federal workers from making trades on prediction markets if they have "material nonpublic information" related to a bet.
The Prediction Market Landscape
Prediction markets have become increasingly popular in the past few years, with participants able to bet on everything from elections to political events.
The industry were examined under the previous administration. However it has found a more favorable environment during the Trump presidency.
Using confidential knowledge is against the law in the securities markets, but there are more ambiguous rules in the prediction market industry.
An official representative for a competing service said their site "explicitly prohibits trading on insider information of any form."
